Auto Insurance

AAA

DEFINITION of 'Auto Insurance'

A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident. Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage.

INVESTOPEDIA EXPLAINS 'Auto Insurance'

Auto insurance premiums, or the amount policyholders pay to be insured, vary depending on: age, gender, years of driving experience, accident and moving violation history, and other factors. Most states mandate that all vehicle owners purchase a minimum amount of auto insurance, but many people purchase additional insurance to further protect themselves.
A poor driving record or the desire for more complete coverage will lead to higher premiums. However, you can reduce your premiums by agreeing to take on more risk, which means increasing your deductible.

RELATED TERMS
  1. Underinsured Motorist Coverage

    An auto insurance policy provision that extends coverage to include ...
  2. Giuseppe Morchio

    An Italian executive who became CEO of Italian automaker Fiat ...
  3. Comparative Negligence

    A principle of tort law that applies to casualty insurance in ...
  4. Premium

    1. The total cost of an option. 2. The difference between the ...
  5. Risk

    The chance that an investment's actual return will be different ...
  6. Deductible

    1. The amount you have to pay out-of-pocket for expenses before ...
Related Articles
  1. The History Of Insurance
    Home & Auto

    The History Of Insurance

  2. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  3. Free Car Payment Insurance: What's The ...
    Budgeting

    Free Car Payment Insurance: What's The ...

  4. Wheels Of A Future Fortune
    Home & Auto

    Wheels Of A Future Fortune

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center